Non-profits have a challenge balancing the day-to-day operations of performing their mission and trying to grow their foundations and endowments. We are here to help
formulate an effective planned giving program,
focus on the donor’s return on investment
develop sound investment policy statement (IPS)
IPS for each of foundation’s different fund uses
Focus IPS on investing ethically and screening for environmental, social, and governance issues to not conflict with non-profit’s mission
A prime example of the dilemma charities face without a strong ethical investment policy was exposed in a Los Angeles Times January 2007 article. It detailed an absurd situation that the Bill & Melinda Gates Foundation found itself in. This foundation is probably the largest in the world and was founded by Microsoft co-founder multi-billionaire, Bill Gates, and his wife Belinda.
The Los Angeles Times stated that, “the [Bill & Melinda] Gates Foundation has poured $218m into polio and measles immunization and research worldwide, including in the Niger Delta. At the same time that the foundation is funding inoculations to protect health, The Times found, it has invested $423m in Eni, Royal Dutch Shell, Exxon Mobil Corp., Chevron Corp. and Total of France—the companies responsible for most of the flares blanketing the delta with pollution.”
Continuing, “oil workers… and soldiers protecting them [in the Niger Delta] are a magnet for prostitution, contributing to a surge in HIV and teenage pregnancy, both targets in the Gates Foundation's efforts to ease the ills of society, especially among the poor. Oil bore holes fill with stagnant water, which is ideal for mosquitoes that spread malaria, one of the diseases the foundation is fighting.”
But why wouldn’t all charities have strong ethical investing policies and thereby limit such potential conflicts of interest? The answer usually is that there is a ‘hands-off’ approach between charities and their financial advisors. Charities often believe they know little about investing (though that is untrue of larger charities such as the Bill & Melinda Gates Foundation) and primarily want the highest returns possible on their investments. Charity funds’ managers also seek the highest returns and so invest their funds in the ways they believe make safe and good returns. Financial Advisor, November 2010
A non-profit has an excellent opportunity to further their mission with appropriate ethical investing policies. With proper structuring, a charity can exclude entire social sectors, such as alcohol, firearms, gambling, military weapons, nuclear power, tobacco, stem cell research, abortion, or adult entertainment. A charity may also exclude specific companies that conflict with their mission.
The Family Wealth Consortium is a collaboration of professionals dedicated to helping and supporting small and middle market businesses and their families, and non-profit organizations.